The effect of CSR on M&A Performance
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2019-04-01
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en
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Abstract
Previous empirical evidence provides mixed results on the relationship between corporate social
responsibility (CSR) and corporate financial performance (CFP). This thesis revisits this relation by
testing two opposing views on CSR, namely the stakeholder value maximization view and the
shareholder expense view. Using a large sample of European mergers, this thesis examines whether
CSR creates or destroys value for acquiring firms’ shareholders. This thesis finds that acquiring
companies with high CSR have lower merger announcement returns than acquiring companies with
low CSR. This suggests that CSR is a source of value-destruction and that the market values CSR
investments lower than its costs. This supports the shareholder expense view. In addition, this thesis
finds that when distinguishing between three different CSR dimensions (environmental, social and
corporate governance) the social dimension is the most important determinant of value-destruction
in mergers.
Keywords: Corporate social responsibility (CSR), Mergers and acquisitions, Announcement returns,
Stakeholder theory.
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Faculteit der Managementwetenschappen